A Bench comprising Justices Vikram Nath and V. Mohan delivered the judgment while allowing an appeal filed by a homebuyer who became a member of a cooperative group housing society in Delhi in January 2003 and was subsequently allotted a flat. The appeal challenged a 2016 order of the National Consumer Disputes Redressal Commission (NCDRC), which had held that the appellant was no longer a consumer at the time of filing the complaint because he had already taken possession of the flat without protest.
Setting aside the NCDRC's order, the Supreme Court observed in its June 4 judgment that a claim for compensation arising from delayed possession relates to the period before the actual delivery of the property. The Bench held that the subsequent receipt of possession cannot, by itself, extinguish the allottee's right to seek adjudication of a claim for compensation for the alleged delay.
The appellant had initially filed a consumer complaint before the District Consumer Forum, alleging deficiency in service due to the delay in handing over possession of the flat. In July 2009, the District Forum referred the dispute to arbitration, and the Delhi State Consumer Disputes Redressal Commission upheld that decision in February 2013. The appellant subsequently approached the NCDRC, which dismissed the revision petition in January 2016.
The Supreme Court noted that the consumer complaint had been admitted by the District Forum, which had issued notice to the cooperative housing society before the society sought referral of the dispute to arbitration. The appellant argued that the existence of an arbitration clause in the agreement between the parties could not automatically deprive the consumer forum of its jurisdiction.
Referring to the Consumer Protection Act, 1986, the Bench observed that the legislation is a beneficial law enacted to provide consumers with a simple, inexpensive, and expeditious remedy against defects in goods and deficiencies in services. The Court pointed out that Section 3 of the Act clearly states that the remedies available under the legislation are in addition to, and not in derogation of, any other legal remedies.
The Bench held that the existence of another forum or another mode of adjudication does not exclude the jurisdiction of consumer forums. It further ruled that the arbitration clause contained in the agreement could not, by itself, be treated as sufficient to deny the appellant the right to pursue relief before the consumer forum.
The Supreme Court also found an additional infirmity in the NCDRC's decision. It observed that the principal issue before the National Commission was whether the District Forum and the State Commission had been justified in referring the complaint to arbitration. Instead of deciding that jurisdictional issue, the NCDRC dismissed the revision petition on the ground that the appellant had ceased to be a consumer after taking possession of the flat without protest.
The Bench held that the NCDRC failed to address the central jurisdictional question arising from the orders passed by the District Forum and the State Commission. It concluded that the reasoning adopted by the National Commission could not be sustained in law.
The Court further observed that the appellant's complaint was not merely for delivery of possession but specifically sought compensation for the delay in handing over the flat. It held that whether there had been a delay, whether the delay was attributable to the cooperative housing society, and whether the appellant had accepted possession unconditionally were issues requiring adjudication on their merits.
The Bench noted that the consumer complaint had never been adjudicated on merits at any stage. Neither the appellant's claim for compensation nor the defence of the respondent cooperative housing society had been examined after the presentation of evidence. The Court ruled that these issues could not be dismissed at the threshold merely because possession had been delivered before the complaint was filed.
Allowing the appeal, the Supreme Court set aside the orders passed by the NCDRC, the Delhi State Consumer Disputes Redressal Commission, and the District Forum. It restored the consumer complaint and directed that it be placed before the District Consumer Disputes Redressal Commission, Dwarka, for adjudication on merits.
The Court directed the District Consumer Disputes Redressal Commission, Dwarka, to decide the complaint after providing both parties with adequate opportunity to present evidence and be heard. Observing that the complaint has remained pending since 2005, the Supreme Court directed the District Commission to make every endeavour to dispose of the matter preferably within one year from the date of receipt of a copy of the judgment.
The ruling reinforces the rights of homebuyers under consumer protection law by affirming that accepting possession of a property does not deprive an allottee of the legal right to seek compensation for delays in delivery. It also reiterates that consumer forums retain jurisdiction despite the existence of arbitration clauses, ensuring that consumer grievances receive adjudication on their merits.
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